AtlantaFX,

I not only agree with you but I also think all risky assets show a high correlation among themselves. This has to do with many reasons but the most important ones are that all markets are related by the same link (people) and by the same problems ( lack of liquidity)

By the way, very nice recovery on the trade basket Antonio.

Risk tolerance has already started to fade. European equities couldn't keep pace with the Heng Sang's meteoric rally yesterday and then the US market's completely dropped the ball. Now the Asian markets have faltered themselves and we aren't likely to see anything happen until the US data has fully crossed the wires.

I'm a little disappointed that the GDP number and Fed announcment come out on the same day. With the FOMC looking to change rates, the potential event risk in the growth number is completely lost. If we had the number next week, we could have gotten some kind of volatility off of it.

Time to scour the yen crosses and find the best technical setup for possible upside and downside surprise scenarios from the FOMC meeting. Any ideas?

USDJPY - The ratio of long to short positions in the USDJPY stands at 1.46 as nearly 59% of traders are long. Yesterday, the ratio was at 1.66 as 62% of open positions were long. In detail, long positions are 6.8% lower than yesterday and 3.0% stronger since last week. Short positions are 6.5% higher than yesterday and 22.4% stronger since last week. Open interest is 1.8% weaker than yesterday and 22.4% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.


Source: FXCM Dealing Desk

For historical data and the latest charts based on the SSI please visit http://www.dailyfx.com/story/special...715337428.html

For information on an FXCM Managed Fund that takes advantage of the SSI, please review our Sentiment Fund at: http://www.fxcmmanagedfunds.com/ or call +1 646-432-2968.

I've been looking across the yen crosses to see if there is a good trade (outside of the majors) on the Fed event risk.

USDJPY is almost assuredly out of the picture. The pair's reaction to the rate decision will likely be too muddled and ambiguous to divine a clear yen trade from. Looking at the various scenarios: a surprise 50bp cut would encourage a sell off on the dollar, but would encourage carry and general risk bidding; no cut would lead the dollar to rebound from its depressed state but the disappointment and sell off in equities could put downside pressure on USDJPY. Realistically, the general interest in the dollar has begun to outshine the pair's correlation to risk and equities action; but who is to say this won't instantly change with a big slap of event risk.

From the crosses, I was looking at possible scenarios from NZDJPY and CADJPY, but I like AUDJPY most for its technical setup. Good rising trend on risk acceptance with a previous major swing high just in sight. Good position for a considerable surprise to the upside or downside.

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From today "USDJPY Reversal Today Looks Likely". It said "Commentary: The USDJPY is playing out as expected. It is possible to count 5 waves down from 117.93 so a larger correction is unfolding. “Look for resistance at 115.56 (100% extension of 113.24-115.04/113.76…this is also close to the former 4th wave at 115.72) and the 61.8% of 117.93-113.24 at 116.14. Once we see evidence of a top, we will be getting aggressively bearish (and we’ll let you know here).” The USDJPY is close to its objective (115.50) so look for a top and reversal today.

Strategy: Get short close to 115.50, against 117.00, target below 111.59


I just wonder this is possible or not. Because this has to really cooperate with stock market, ie stock market collapse. If not, then JPY hard to breakthrough 114.

Speculative Positioning (After FOMC rate decision)

The ratio of long to short positions in the USDJPY stands at 1.40 as nearly 58% of traders are long. Yesterday, the ratio was at 1.66 as 62% of open positions were long. In detail, long positions are 12.0% lower than yesterday and 2.7% weaker since last week. Short positions are 4.3% higher than yesterday and 19.9% stronger since last week. Open interest is 5.9% weaker than yesterday and 17.6% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.

Source: FXCM Dealing Desk

For historical data and the latest charts based on the SSI please visit http://www.dailyfx.com/story/strateg...903946044.html

For information on an FXCM Managed Fund that takes advantage of the SSI, please review our Sentiment Fund at: http://www.fxcmmanagedfunds.com/ or call +1 646-432-2968.

I bought what was a 25 delta dollar call with a strike of 116.75 with expiry of 19 Nov on Oct 19 drivin by a kink in the smile. I hedged of the delta, which was good, vol dropped late last week and early this weak so my gamma shot up and it got to the point where at spot low delta was 5 delta. Spot popped and so did vol, so I've made delta and vega. Now it seems like 117 by 19 November is realistic. So I've got a conundrum...do I hedge my delta or leave it unhedged? For now I'm hedging less frequently, each half figure, and luckily, because vol popped, I'm less long gamma, so my hedges are smaller in size. I think I'm going to stick to this strategy to 116, and then hedge every 10 pips until 116 so I can make bunch of little balances, and after 116.50 I will only hedge below, but leave the upside uhnedged so that my spot position doesn't offset my options position too much. Maybe I'll only hedge at specific delta levels. Any thoughts on 117 by 19 nov?

Hey FXPert,

You're hedging by price solely? Does that happen through a program or are you doing it manually? Personally, I would stick to regular time intervals because 10 points will come and go every 15 minutes if underlying volatility dries up and we get another period of range trading.

As for the USDJPY reaching 117.00, I think it has a good probability attached to it. Though the medium-term time frame (daily for me) is down, the longer term has been in a broad range or wedge, so it could easily get back up to 120 given enough time - beyond that it gets more speculative on direction. However, in your less than three-week time frame, your increasing your burden. Momentum is healthy now (and if it continues, you we could to 118 in another week's time), but we are winding down on serious event risk that will supply the dollar, yen and equities with price action (of course if we have a big upside surprise from NFPs on Friday, you could simply book profit on the position // or a downside surprise could leave your position treading water permanently). And, considering a few technicals building in the area of 116.80-117.25 (resistance zone, the October pivot, big 50% fib, 100-day SMA) technical traders may take their time in running the pair up to 117.

All that being said though, I think you position is based on both a reasonable price objective and time period; and the active hedging will reduce your risk as long as you monitor the spreads on your adjustment.

If you don't mind me asking, what program are you using to generate payout, greeks and theoretical pricing? I've been pretty disappointed by what I have seen for FX options and I don't have the technical expertise to simply adjust the free equity modeling programs for FX.

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This reversal is gaining momentum. Not good going into the NFPs this far away from resistance.

During this week carry trade positioning grew less extreme. At this time 61% of retail traders are long USDJPY (long to short ratio is 1.55). However, since last week, retail has been selling the USDJPY (short positions are up by 1.1%). When retail is long but reduces its exposure, the long term direction remains bearish but the market might have some upside in the short term. The SSI gives us a medium strength SIGNAL TO SELL USDJPY.

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Got short 2 days ago.. Rode out the move up to 116.00.. .. Looked like it smacked a wall! NFP bad.. More Yen Strength.. Trades are set up and ready to go.. 100.00 +/- here we come.

Anyone else in waiting for the "Dollar Dive"?

Looking back over my Yen Crosses.. God thing I got out of Eur and Nzd/Jpy on Tuesday night ahead of the Fed.. Now where did that Post go about the Yen cross Reversals.. Might be time to get short.... It appears that a reverse megaphone is forming in some of the crosses.

Carry trade reset off of new lows or a brand new basket made up of every thing against the US$?

Are you looking for a basket to go long against the dollar on? If that is the case, that is pretty courageous. While I admit the medium and long-term charts are all pointing to moves against the dollar, loading up into an arguably overbought position like an anti-dollar trade seems pretty dangerous. At these levels, it seems that some caution and hedging should be in order - like going long GBPUSD/NZDUSD and short AUDUSD and EURUSD.

The carry trade is another matter completely (and USDJPY is in a world of its own). The yen crosses could loose its correlation to the dollar's direction easily and we could see the rebound in risk appetite carry the crosses back to their highs. However, given the lower highs we have been getting, I'd be cautious in taking such a stance. Let's see if we another down day in US equities tomorrow. I'm thinking a controlled decent from here is the best means for seeing a deeper correction as a sharp selloff encourages greater value buying. Any thoughts on this? Is a controlled drop in equities or plunge more likely to see a greater, total percentage move when all is said and done?

I don't have a trading platform like Meta or TradeStation so I have to back test all of my "Brain Storms" by hand. With a young family; I run out of time to do this.. Hence my hair brain idea of a Anti-$ basket..

My only Voice is these forums.. I don't have a lot of "Trader" friends to bounce ideas off of.. One Friend trades stocks but..He slow trades.. He is a Buy/Hold for years guy... To me.. That is not a "Trader"; that is an "Investor".

I think trading and Investing goes back to that old addage.. What are the 2 things your parents never talk to you about growing up? Sex and Money... Trading is Money..

Thanks for the comentary about the Anti-Dollar basket.. I could have ended up on the wrong side of that.

Slow fall in the high yielders? Possibly.. My daily chart shows GB/JP banging its head on the 120 MA High... This is inline with the funnel formation that has formed on the daily charts. I think about December is when we are finally going to see some traction and break out of these funnel formations or, Some serious range trading comming ahead until the US finally figures out what it is going to do. Gonna have to get through this funnel trading.